Gasoline prices slide ahead of crucial election

Gasoline prices have plummeted nearly 20 cents a gallon since early October.

Photo: Bill Montgomery / Houston Chronicle

Gasoline prices have plummeted nearly 20 cents a gallon since early October to seven-month lows, putting billions of dollars in consumers’ pockets as they head to the polls to decide contentious mid-term elections.

Gas prices saw the biggest drop of the year over the past week, falling an average of nearly 8 cents a gallon in Houston and 7 cents nationally, according to GasBuddy, which tracks gasoline prices across the county. Average pump prices in Houston have plunged to $2.43 from $2.61 from a month ago, an 18-cent decline. Nationally, they’ve fallen an average of 19 cents from $2.92 a gallon to $2.73.

In San Antonio, prices have fallen even faster, down 24 cents to $2.36 a gallon from $2.60 a month ago.

GasBuddy estimated that 20-cents decline in gas prices translates to $30 billion in saving for American consumers over a year. The recent slide has undercut what was emerging as campaign issue this summer as gasoline climbed toward $3 a gallon following President Donald Trump’s decision to pull the United States from the international nuclear agreement and impose sanctions of Iran’s oil exports. Trump called on Saudi Arabia and OPEC to pump more oil to make up the shortfall and keep prices stable.

Price cut

Average gasoline prices have fallen sharply over the past month:

U.S.: Down 19 cents to $2.73 a gallon

Houston: Down 18 cents to $2.43 cents

San Antonio: Down 24 cents to $2.36

Source: GasBuddy

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Seasonal factors have contributed to the recent decline; gasoline costs typically slip in the fall after the end of the busy summer driving season and the switch to cheaper winter-grade gasoline. But crude oil prices have fallen faster than expected, driving the sharp declines in the cost of gasoline, which is refined from crude oil.

U.S. drillers are pumping record volumes of oil while the world’s other leading producers, Russia and Saudi Arabia, also have increased output. In addition, the Trump administration has granted six-month waivers from the Iran sanctions to eight countries, including some of the world’s biggest energy consumers, such as China, Japan and India

The waivers will keep more Iranian oil on global markets. Oil settled at $63.10 a barrel in New York Monday, near a seven-month low. Crude has lost more than than 17 percent from its recent peak of about $76 a barrel.

“It’s par for the course to see gas prices in decline this time of year,” DeHaan said. “That said, I think the Trump administration is under a little bit of pressure with fuel prices going into the midterms and the waivers are a way to do it.”

DeHaan projects fuel prices could fall another 10 to 25 cents a gallon in December, slipping to as low as $2.20 a gallon in the Houston area.

Cash savings for motorists often are at odds with the oil and gas sector that leads much of the Texas economy. Even though many energy analysts remain relatively bullish long term, more of them expect crude prices to again fall below $60 in the next few months, before recovering again.

“Oil prices could get pretty sloppy the next three to four months,” said Bill Herbert, a senior energy analyst at Piper Jaffray & Co. in Houston. “The biggest surprise has been much higher U.S. production growth.”

The Energy Department reported last week that America’s crude output hit a record of more than 11.3 million barrels a day in August and surpassed Russia after growing production by 400,000 barrels a day from 10.9 million barrels per day in July.

And those volumes have almost certainly risen since August, said Sandy Fielden, Morningstar’s director of oil and products research.

Even though the Saudis and Russia have increased their own production — largely to offset declines from Iran and Venezuela — they’ve shown a willingness to curb their output as needed to prevent another collapse in oil prices, Fielden said. “That provides U.S. producers with a green light to just keep producing,” he said.

Fielden expects U.S. oil supplies will keep growing and flowing into global export markets — from port hubs in Houston and Corpus Christi — effectively taking market share from the Organization of the Petroleum Exporting Countries. OPEC and Russia may well have to give up some their share to avoid a repeat of the 2014 oil bust, when the Saudis pumped more oil into an oversupplied market.

Jordan Blum is a senior energy reporter at the Houston Chronicle since 2015. He has extensively covered the industry from the 2014 bust in oil prices to the more recent boom in West Texas’ Permian Basin. He has written about everything from Texas’ national lead in renewable wind power to the Houston area’s growing dominance in petrochemical and plastics manufacturing.

Previously, Jordan was an award-winning reporter at The Advocate in Baton Rouge and New Orleans as a statehouse reporter and education writer, and then as the newspaper’s Washington Bureau chief. Jordan is a New Orleans native who graduated from Texas Christian University with a journalism degree before going back to work at daily newspapers in Louisiana.